Brokers must use Colorado Real Estate Commission-approved contract and form templates.
Before you read
Test yourself first: 5 questions
Question 1 of 5
How must a Colorado broker handle earnest money and other client funds received in a transaction?
Answer: B. Client funds such as earnest money must be held in a separate escrow or trust account and may not be commingled with the broker's own funds.
Question 2 of 5
A Colorado broker deposits an earnest money check into a personal checking account instead of a designated trust or escrow account. This conduct is BEST described as which prohibited act?
Answer: A. Mixing client/customer money with the broker's own funds is commingling, and using those funds for personal purposes is conversion. Both are serious license-law violations that can lead to discipline.
Question 3 of 5
Under Colorado Real Estate Commission rules, when must an employing broker deposit a buyer's earnest-money check into a trust (escrow) account?
Answer: A. Commission rules require funds belonging to others, including earnest money, to be deposited into the broker's trust account promptly, generally not later than the third business day after the contract is accepted, unless the parties agree in the contract to a different handling of the deposit.
Question 4 of 5
A Colorado broker deposits a client's earnest money into the broker's personal operating account so the funds 'don't get lost.' What violation has occurred?
Answer: C. Placing money belonging to others into a personal or business operating account is commingling, which is prohibited. Funds of others must be held in a designated trust or escrow account separate from the broker's own money.
Question 5 of 5
A Colorado broker holding earnest money for a transaction must generally:
Answer: B. Trust/escrow money such as earnest money must be kept in a designated escrow or trust account, separate from the broker's personal or business operating funds, to avoid commingling.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Seller's Property Disclosure form is used to disclose the property's known condition.
- Brokers must use Colorado Real Estate Commission-approved contract and form templates.
- Trust/escrow funds (earnest money) must be held in a designated trust account, separate from broker funds.
- Commingling broker funds with client trust funds is prohibited.
- Colorado is NOT a community-property state.
- Material facts about the property must be disclosed to all parties.
- Brokers must keep transaction records and account accurately for all money handled.
Colorado Disclosures, Escrow/Trust Funds & Key Items: FAQs
Is Colorado Disclosures, Escrow/Trust Funds & Key Items on the real estate exam?
Yes. State License Law is a scored domain on the Colorado real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does Colorado test this differently?
Colorado applies its own license law on top of the national portion. This page covers the Colorado rules specifically, which is what the state section of your exam tests.
